A Further Growth of BRICS Raises no Doubts

Goldman Sachs has closed down the BRICS Fund, which was created for investing in Russia, Brazil, India and China

As reported by Bloomberg, citing a document from the US Securities and Exchange Commission, the BRICS Fund comprised of the Fund meant for supporting developing markets. This decision was caused due to financial losses incurred by the Fund, notes Sergey Karataev, section head of economies of foreign countries at the Economic Research Center under the Russian Institute of Strategic Studies.

“This event can be considered as the one that has happened at the level of investment campaigning and the investment markets. There are hundreds and thousands of such funds. One gets closed down — another is opened. Now, from the point of view of investors, stocks indices of the BRICS countries’ funds have changed. The Russian market is not growing at present and the Brazilian is facing problems. At the same time, there was a recession in the Chinese market, but it is now been overcome. However, given the index levels of all countries — it is now impractical to keep such a fund active”.

At the time of creation of the BRICS Fund, the organizers expected to earn more income from investments in the Chinese economy, and hoped to profit from activities in Russia, India and Brazil. Besides, in 2010, the BRICS Fund had reached a culminate point of its growth. In addition, in 2011, Goldman Sachs economist Dominic Wilson had predicted a decline of interest in the BRICS, due to a decrease in the four countries of their respective employment levels. However, current difficulties are by no means an evidence of weakness of the BRICS, emphasizes Sergei Karataev.

“If you take the international financial institutions: the IMF, World Bank, and see their records, in recent years, the BRICS countries have begun to stand out as a group of countries. This shows that the world has begun to realize that such an association exists. Plus, the fact that there are no doubts in the future prospects of its existence”.

In addition, says Sergey Karataev, the BRICS should not be considered just as a union of the economic bloc.

“BRICS — is not only and not that much of an economic project. Just in the economic and financial matters, it is most revealing. This association characterizes cooperation in science and in the educational field. Recently, a university forum of the BRICS was held in Moscow. That is, the range of issues involved in cooperation is quite wide”.

If one has to consider just the economic component of the association, says Russian expert, one should remember results of the BRICS summit in Ufa. Questions pertaining to investment were resolved by the member- countries of association by deciding to create the BRICS Bank.

It was also decided to establish a pool of conventional reserves currencies. This was supposed to be a kind of “mutual benefit fund” for the BRICS countries. The creation of these two financial institutions is capable of competing with the IMF. Moreover, its creation is capable of providing, participants of the union, protection from the influence of Western financial institutions.